Foodservice price inflation was at 2.5% in January – the lowest point for almost a year.

The CGA Prestige Foodservice Price Index reports a steep fall from the 5.1% recorded in December.

The index puts this down partly to seasonal trends driven by the supply and demand of key foodservice items, but also says this may be an indication that some of the inflationary pressures that have beset the industry in the past couple of years might be easing.

The index identifies a relaxation of inflation in key categories including bread and cereals (2.3%), and milk, cheese and eggs (0.2%), while fish prices fell 2.6% year-on-year after months of high inflation.

Despite the positive signs, the index identifies a number of inflationary challenges that lie in wait for the sector in 2018 and beyond. They include the impact of Brexit on the availability of migrant labour, on which vegetable, fruit, and fish and meat-processing industries have depended in recent years. There is further uncertainty over oil prices, trade tariffs and supply from the UK meat industry; the impact of the “sugar tax”; and the effect of the recent cold weather.

Prestige Purchasing head of consulting and insight Christopher Clare said: “FPI has seen another fall this month as multiple categories see dramatic drops, notably fish and dairy which are by far the most volatile categories. If the index continues downwards we may finally see FPI reach levels comparable to those of 2016. However, price fluctuations and continued uncertainty about Britain’s economic future will exacerbate volatility.”